§ Mr. Gouldasked the Chancellor of the Exchequer what is the Treasury's central estimate, using its current model, of the effect on the money supply in the relevant forecasting period of (a) a reduction in the value of the £ sterling from $1.78 to the current $1.62 (b) a further reduction of 10 per cent. on the value of the £ sterling and (c) the introduction of a 50 per cent. import deposit scheme with the same coverage as: (i) the 1968 scheme (ii) the current Italian scheme and (iii) any alternative contingency scheme.
§ Mr. Denzil DaviesThe current Treasury model is not equipped to estimate the effects on the money supply of exchange rate changes and import deposit schemes. In any case, as I explained in my answer to my hon. Friend on 18th October—[Vol. 917, c.324–5.]—the net effects on money supply would depend on a wide range of factors and it is not possible to make single precise estimates, even when using a model. As regards the possible direction of the effects on the money supply, I refer my hon. Friend to the earlier answer.